The Haryana government has recovered the bulk of funds linked to the suspected fraud at IDFC FIRST Bank’s Chandigarh branch within 24 hours, Chief Minister Nayab Singh Saini said in the assembly on Tuesday, easing immediate concerns over financial exposure even as the lender’s shares showed signs of stabilising after a sharp fall yesterday.

Addressing the state Assembly, Saini said approximately ₹556 crore was redeposited by the bank into government-linked accounts, along with about ₹22 crore in interest, taking the total recovery close to the suspected diversion amount. The recovered funds belonged to various Haryana government departments, boards and corporations.

“I want to clarify before this house that the entire amount lost in yesterday’s incident has been deposited back into our accounts within just 24 hours,” the chief minister said, adding that the interest component had also been returned and credited.

Branch-level collusion suspected

The CM indicated that preliminary findings point to collusion by four to five middle- and lower-level employees at the Chandigarh branch, who allegedly carried out the operation. He said strict action would be taken against any bank or government officials found involved in the matter.

Saini also announced the formation of a high-level committee to investigate the incident, fix accountability and recommend safeguards to prevent similar occurrences in the future. The probe is expected to examine transaction trails, authorisation processes and compliance lapses tied to the accounts in question.

The development supports earlier indications that the suspected fraud may be localised rather than systemic, centred on specific accounts rather than the bank’s wider operations or retail deposit base.

Market reaction and bank response

Shares of IDFC FIRST Bank, which had dropped sharply after disclosure of the suspected fraud exposure, steadied in trading following news of the swift recovery and containment of financial risk. Investors had initially reacted to concerns around governance controls, potential earnings impact and reputational damage.

The bank has said it is cooperating with authorities and has initiated internal reviews and appointed KPMG to conduct an independent forensic audit. It has also taken disciplinary steps against staff linked to the incident and is strengthening internal monitoring mechanisms.

The Reserve Bank of India and other regulatory bodies are monitoring developments, though early assessments suggest no broader risk to the banking system.

Focus shifts to accountability

While the quick recovery reduces the immediate fiscal impact on the Haryana government, the episode has intensified scrutiny on how large public funds are handled in private bank branches and whether existing oversight systems are adequate.

The findings of the proposed committee and ongoing investigations are expected to determine the full sequence of events, responsibility for the lapse and any structural changes needed in banking and treasury procedures.

The shares of IDFC First Bank rose over 3% during intraday trade on Tuesday. The private lender's stock price has surged nearly 18% in the past year, underperforming the Nifty Bank index that has surged over 25% during the same period.